Business

September 14, 2007

Many of my friends and business associates thought I was crazy for leaving Expedia Corporate Travel and going to ShareBuilder 401(k) a year and half ago.I was part of a great team that built the fastest growing unit in Expedia in 3 short years.We had sold 3,000 Mid and Enterprise customers (unheard of in the industry), we were profitable, and a lot green pastures ahead with our leading technology.I led a marketing team of 12 people, 4 agencies, and we had a lot of momentum to continue our fast growth.

In reality, the comments and feedback I received reinforced why I knew ShareBuilder 401(k) was going to be a great success and that I wanted to be a part it.

When a Great Idea Is Likely a Bad One

When you float an idea, and everyone says it’s a great idea (and I’m talking most everyone from friends, business colleagues, industry pundits, media, and so on), well, that’s when I really question if the idea is any good at all.If it’s so great, someone would have done it big time already.An exception to this “great idea” rule might be new technology offerings, as it can make what wasn’t possible, possible or different.

Second Guessers Help You Find Great Ideas

When you get a lot of folks questioning a new idea, it means to me it has real potential.If you can see why it hasn’t been successful in the past and find common sense ways to address it and do it differently, you’ve got a great idea.

To finish this riff off with the job analogy… so how did I know ShareBuilder 401(k) was destined to be great? It was fairly easy. We are 1) selling to an underserved, under penetrated market, 2) we are completely different than conventional 401(k) providers in meaningful ways, and 3) we target small businesses through channels not common in the industry.

Consider this:

nIt’s much more costly and difficult to steal clients than it is to sell to someone who doesn’t have your service and needs it.Greater than 85% of small businesses with less than 50 employees do not have 401(k) plan. Selling against not having one is much easier!

nThe need is clear.Small business owners need a tax-advantaged way to save.They also need more tools to retain and reward employees.401(k)s are that answer.

nWe built a plan to educate and sell to small businesses via low-cost online channels and unique partnerships.If we could tap into companies and associations that serve small businesses which had truly loyal followings, we had a big advantage to make this idea work. A great example is our Costco partnership.Costco has a large small business client base.Costco members are very loyal to a company that sets a very high bar on providing quality products at a great price.Costco is the Good Housekeeping seal of approval for its members.

nThe internet provides a better way to sell 401(k)s that is easier, more affordable. The ShareBuider 401(k) is 100% online and paper-free.401(k) plans are more complex than they need to be, especially for business with less than 50 employees. We designed an online solution that simplified the process and focused on what is important for most small businesses including sole proprietors.As a result, we do it for a lot less than most.

nOur investment selection is unique, easy and smart.We chose low-expense index-based Exchange Traded Funds (ETFs).This makes us different!ETFs are like index mutual funds but typically have even lower expense ratios.We leveraged proprietary technology that eliminated transaction costs to the individual investor.Trading costs are typically paid with each ETF trade, but not in our 401(k)s.Many major mutual fund companies do not really want to use ETFs in their 401(k) offerings – so we may be different for quite a while!Low-expense, index-based investments fit with my personal belief, and many who have studied this much deeper than me (read John Bogle's book), on the best way for most people to save for the long-term.

I loved my time and team at Expedia. ShareBuilder was simply the right idea at the right time. And it sure feels good helping businesses and their employees save so they have a real shot at an easier financial future.That’s how I knew what some thought was a bad decision was a great one. What ideas should you kill... what ideas might be great for you?